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Bear Stearns Downgrades Emmis Communications


From Standard & Poor's Equity Research

Emmis Communications (EMMS) shares fell after the company's CEO scrapped plans to take the company private. Bear Stearns downgraded the stock to peer perform from outperform.

Analyst Victor Miller says while most speculated that Emmis CEO Jeff Smulyan would pull his $15.25 a share bid based on the tougher radio advertising and financing markets, he believes Smulyan was willing to pay approximately $17.50 a share. Instead, he thinks the company's Special Committee demanded a $20-plus bid. Without an equity partner, Emmis' leverage would have approximated 12.6 times, too rich to be financed.

Based on continued weak station ratings and continued sluggishness in the New York radio market, Miller cut his $94.4 million fiscal year 2007 (February) EBITDA estimate to $89.9 million. He expects the stock to trade in the $12.50-$13 range.


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